WP06/2010

South Africa’s economics of education: A stocktaking and an agenda for the way forward

Stellenbosch Working Paper Series No. WP06/2010

Author(s): Martin Gustafsson, Thabo Mabogoane

JEL Classification: I21, I28

Keywords: Economics of education, South Africa, education policy, rates of return, production functions, teacher incentives, benefit-incidence analysis

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Abstract:

The paper reviews some of the existing economics of education literature from the perspective of South Africa’s education policymaking needs. It also puts forward a suggested research agenda for future work. The review is arranged according to five key areas of analysis: rates of return, production functions, teacher incentives, benefit incidence, cross-country comparisons. Whilst benefit incidence analysis is able to demonstrate large improvements in the equity of public financing, cross-county comparisons reveal that not only is quality inequitably distributed, it is overall well below what the country’s level of development would predict. Production functions, especially if translated to cost effectiveness models, can point to important policy solutions. Rates of return are difficult for policymakers to interpret, and need to be viewed in the context of qualifications. Teacher incentives is a policy area that is badly in need of a better theoretical and empirical basis.